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The logo of US multinational medical devices and pharmaceutical company Johnson & Johnson at the entrance of the research and development plant, in Val-de-Reuil, northwestern France. Image Credit:

New York: Shares of Johnson & Johnson (J&J) tumbled 12 per cent on Friday and were on track to post their biggest percentage drop in more than 16 years, after Reuters reported that the pharma major knew for decades that cancer-causing asbestos lurked in its Baby Powder.

The decline in shares erased about $47 billion from the company’s market capitalisation with investors worrying about the fallout of the report as it faces thousands of talc-related lawsuits.

“It is not surprising that an article from Reuters outlining years of potential knowledge regarding the perils of talc should agitate investors,” BMO Capital Markets analyst Joanne Wuensch said. “This is not a simple matter, as there are more than 10,000 pending cases.”

J&J was found to have known about the presence of small amounts of asbestos in its products from as early as 1971, a Reuters examination of company memos, internal reports and other confidential documents showed.

The Reuters report also showed the company had commissioned and paid for studies conducted on its Baby Powder franchise and hired a ghostwriter to redraft the article that presented the findings in a journal.

The company, in 1976, had assured the US Food and Drug Administration that no asbestos was “detected in any sample” of talc produced between December 1972 and October 1973 when at least three tests by three different labs from 1972 to 1975 had found asbestos in its talc.

J&J has been battling cases claiming its Baby Powder and Shower to Shower products cause ovarian cancer. The products have also been linked with mesothelioma, a rare and deadly form of cancer that affects the delicate tissue that lines body cavities.

While J&J has dominated the talc powder market for more than 100 years, the products contributed to a mere 0.5 per cent of its revenue of $76.5 billion last year. Talc cases make up fewer than 10 per cent of all personal injury lawsuits pending against the company.

However, Baby Powder is considered essential to J&J’s image as a caring company a “sacred cow” as one 2003 internal email put it.

Shares were last down 9 per cent at $134.43, also pulling down the broader S&P 500 health care index.